Pacific Oak Strategic Opportunity REIT: Investor Lawsuits

Pacific Oak Strategic Opportunity REIT – Complaints, Lawsuits & Investor Claims

Have you suffered investment losses in Pacific Oak Strategic Opportunity REIT? If so, you may have recovery options.

What is Pacific Oak Strategic Opportunity REIT?

Pacific Oak Strategic Opportunity REIT, Inc. (formerly KBS Strategic Opportunity REIT II) is a publicly registered non-traded REIT designed to capitalize on dislocation, lack of liquidity, and government intervention in the commercial real estate market by acquiring opportunistic investments in discounted debt and distressed equity assets.

The REIT closed its initial public offering on November 20, 2012. In October 2020, shareholders of Pacific Oak Strategic Opportunity REIT II approved a merger into Pacific Oak Strategic Opportunity REIT.

Strategic Alternatives Review – November 2025 Update

Pacific Oak Strategic Opportunity REIT Inc. has initiated a formal review of strategic alternatives after acknowledging a “difficult financial situation.” In October 2025, the board formed a special committee of independent directors to evaluate all available options, and in November, the committee engaged Robert A. Stanger & Company Inc. as its financial adviser.

This review follows increasing financial pressure tied to significant upcoming debt maturities, impairment charges, and persistent challenges in the commercial real estate market. The REIT has also warned about its ability to continue as a “going concern,” making restructuring, asset sales, or recapitalization likely considerations.

Pacific Oak, through its subsidiary Pacific Oak SOR (BVI) Holdings Ltd., also has outstanding Israeli bonds and is currently engaged in negotiations with bondholders. A breach of financial covenants could accelerate repayment of this debt. In August 2025, the REIT entered into a standstill agreement with the bond trustee to avoid immediate default while negotiations continue.

Earlier in 2025, former CFO and EVP resigned from the company.

Pacific Oak Strategic Opportunity REIT – Ongoing Financial Challenges

“Going Concern” Warning

In August 2025, the company disclosed “substantial doubt” about its ability to continue as a going concern. As of the most recent filings, Pacific Oak reported $512.8 million in debt obligations due within the next year, including the Israeli bonds that could be accelerated if financial covenants are breached.

Rising Impairment Charges

Pacific Oak recorded $52 million in impairment charges in Q2 2025 due to declining market conditions and reduced projected cash flows—more than double the $21 million reported as of Q2 2024.

Strategic Asset Sales & Liquidity Measures

• 17 residential properties sold in Q2 2025

• A strategic property reclassified as “held for sale”

• Georgia 400 Center (office property) sold in July 2025 for $39.1 million, with proceeds used to repay $39.5 million in related mortgage debt

Borrowing & New Credit Agreements

• Pacific Oak borrowed $8 million from its advisor in March 2025, later increased to $10 million

• In July 2025, the REIT closed on an $80 million loan with Whitehawk Capital Partners LP, secured by land and development assets; proceeds were used to pay off outstanding Israeli Series C bonds

Decline in NAV & Secondary Market Pricing

• NAV per share (April 2025): $5.72

• Down from $8.03 (Sept. 2023) and $10.50 (Sept. 2022)

• Shares listed on Lodas Markets for as low as $2.50 per share

Suspension of Redemptions

Redemptions were suspended in July 2024, severely limiting liquidity for investors.

Pacific Oak Capital Markets Ceases Operations

Pacific Oak Capital Markets LLC, the managing broker-dealer for the REIT, ceased operations on June 30, 2025. The firm previously wholesaled several alternative investment products, including:

• Pacific Oak Strategic Opportunity REIT

• SmartStop Self Storage REIT (NYSE: SMA)

• Strategic Storage Growth Trust III

• Strategic Storage Trust VI

• Blue Door Property I DST

Risks of Investing in Non-Traded REITs

Key risks include:

• Illiquidity and suspended redemptions

• High upfront commissions for brokers

• Valuation challenges and steep secondary-market discounts

• CRE market volatility, especially in the office sector

• Rising interest rates and high leverage

Broker Due Diligence Obligations

Broker-dealers must ensure investments like Pacific Oak are suitable for each investor. If your broker failed to perform adequate due diligence, or if the risks were misrepresented, you may be able to pursue a FINRA arbitration claim.

Recovery Options for Investors

If you invested in Pacific Oak Strategic Opportunity REIT and suffered losses, The White Law Group may be able to help you recover your investment through FINRA arbitration.

Call The White Law Group at (888) 637-5510 for a free consultation.
Our attorneys have offices in Chicago and Seattle and represent investors nationwide.

FAQs

1. Why is Pacific Oak Strategic Opportunity REIT in financial trouble?

The REIT faces significant near-term debt maturities, declining property values, impairment charges, and ongoing weakness in the commercial real estate sector. The company has also warned of substantial doubt about its ability to continue as a going concern.

2. What does the strategic alternatives review mean for investors?

The board is formally evaluating options such as restructuring, asset sales, a company sale, or recapitalization. Outcomes could impact share value, liquidity, and future distributions.

3. Can I sell my Pacific Oak REIT shares?

Liquidity is extremely limited. The redemption program was suspended in 2024, and secondary market platforms have listed shares at significant discounts.

4. What can I do if I lost money in Pacific Oak Strategic Opportunity REIT?

You may be able to recover losses through a FINRA arbitration claim if your financial advisor recommended the REIT without proper due diligence or suitability analysis.